October 21, 2013

Dr. Karnit Flug, Bank of Israel Governor
After a rocky selection process, the government has chosen Dr. Karnit Flug to head Israel’s central bank. Flug, who has been acting chief of the Bank of Israel since her predecessor Stanley Fischer stepped down in June, is the first woman to take on the role of governor.

Economists and trade analysts welcomed her appointment.

“There will be a ‘responsible adult’ now that can carry out more substantial purchases [of dollars] when speculators try to test the dollar/shekel rate,” Oren Eldad, head of trading house ATrade, told Reuters.

Flug holds an MA (cum laude) from the Hebrew University and a Ph.D. in Economics from Columbia University. She has worked at the International Monetary Fund as an economist and as a senior research economist at the Inter-American Development Bank.

She was appointed assistant director of the research department at the Bank of Israel in 2001.

Flug’s appointment came after a topsy-turvy selection process since Fischer resigned his post. Although Fischer recommended Flug to succeed him, Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid sought other candidates instead.

Jacob Frenkel, central bank governor in the 1990s and chairman of JPMorgan Chase International, was first selected but pulled out following reports of his role in a shoplifting scandal in 2006.

Bank Hapoalim Chief Economist Leo Leiderman was also asked to fill Fischer’s shoes but declined the nomination citing personal reasons.

Netanyahu and Lapid said in a statement: “We were impressed by Dr. Flug’s performance over the past months as head of the Bank of Israel and we are confident she will continue to help us lead Israel’s economy to further achievements in the face of the world economic upheaval.”

Upon accepting the appointment, 58-year-old Flug skipped over the fact that she was not the first choice pick and instead focused on business, saying the central bank and Israel’s economy faced significant challenges.

Opposition leader Shelly Yachimovich said: “Even if the process was faulty and at times ridiculous, Netanyahu needed courage to backtrack from his mistake and correct it, and in the end made the best decision.”

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Jason Harris

Jason Harris

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